Study: “Nudge” Customers into Going Green

Printers have become accustomed to incentivizing customers to use environmentally friendly consumables by minimizing the cost difference from non-green versions. But a new research study shows that this approach may be counter-productive. Would charging more for a “green marketing package” actually increase your customers’ green purchasing intent? This study suggests that the answer is yes.

Printers have become accustomed to incentivizing customers to use environmentally friendly consumables by minimizing the cost difference from non-green versions. But a new research study shows that this approach may be counter-productive. Would charging more for a “green marketing package” actually increaseyour customers’ green purchasing intent? This study suggests that the answer is yes.

The yet-to-be-published study, “The Effect of Charging for Recycling on Consumer Adoption of Green Electronics,” by researchers at Georgia Tech, is based on the hypothesis that charging for recycling rather than making it free increases the likelihood that consumers will purchase the recyclable product over a non-recyclable one. As counter-intuitive as it is, the hypothesis was born out. Researchers found that charging for recycling increases the likelihood that consumers will buy the green version by creating a “nudge” in their minds that recycling and recyclable products have value.

The idea of a “nudge” is that you are indirectly planting an idea in people’s minds in a way that changes their behavior. In this case, most people don’t think about the fact that recycling costs retailers money, so by promoting a recycling program withoutcharging for it actually decreases investment in green products by devaluing recycling in the eyes of consumers. Conversely, charging for recycling places a value on recycling, increases intent to purchase green products, and as a nice side benefit, increases the ability of retailers to offer recycling by reducing the costs associated with it.

The study, inspired by Best Buy’s recent decision to charge a flat fee to accept some used consumer electronics for recycling ($25 for televisions and computer monitors), studied the potential of charging for recycling as a green marketing strategy. In the study, researchers compared three approaches to recycling:

Free recycling.

A recycling “tax” (a premium charged at the point of sale to cover the cost of recycling later).

A flat-fee charge to accept products for recycling.

“We document the surprising result that, compared with the current policies, charging for recycling increases the adoption of green products by many consumers,” says Mahdi Mahmoudzadeh, director of the study. “We find that, compared with free recycling and recycling tax scenarios, charging for recycling increases regular buyers’ adoption of green electronics by around 5%.”

This finding was consistent regardless of demographic. The only variable significantly impacting the results was whether consumers were buying an additional product or making an emergency replacement of a broken one. The “nudge” was effective for additional purchases, but not for emergency replacements.

While the researchers called the results “surprising,” they also cited a volume of other studies supporting similar conclusions. Thus, these findings are consistent with other studies on similar topics.

The takeaway for our industry? If you want to increase your customers’ green behavior, maybe charging a premium for a “green marketing package” would be more effective than trying to maintain parity in costs and relying solely on marketers’ consciences. It’s counter-intuitive, but the research bears it out. “Nudges” work.

Discussion

While this may work for some, others will not pay a fee to recycle or dump. Their solution can be seen in the proliferation of legacy electronics by the side of the road. Thus some states have eliminated these fees, hoping to keep their environment a little less polluted.A side note, waste handlers will no longer take coated papers in Oregon and California. With that recycling chain broken uncoated papers may be the only option. Their cost is higher so the uncoated option already has an economic burden. Will that make sense to the shiny crowd?